Chase the Fraud Back to Its Source

Fraud spreads quickly. People involved in one scam are likely to be involved in another. People who are involved in scams associate with other people involved in scams. Perpetrators use family members, friends and former cellmates to franchise their scams. “In the North Carolina Medicare case, three subjects residing in North Carolina traveled to Florida where relatives taught them how to anonymously file false Medicare claims. They then returned to North Carolina and began filing such claims.”

Due to limited resources, we often ignore suspicious cases if we don’t think they involve a lot of money. But sometimes a few claims are the smoldering coals that will start the next fire.

Even if we do not have the resources to investigate all potential losses, we need to keep track of all suspicious activity. If we collect the data, we can find patterns in the smaller scams. One person or group may try dozens of smaller scams rather than one big scam and be responsible for hundreds of thousands of dollars lost. By analyzing patterns of suspicious activity we can uncover new modus operandi.

Here’s an example from a Medicaid program (some details have been changed and two cases have been combined). Using decision support tools, we find that Dr. Katz billed for home visits to several patients on days when those patients were in the hospital. The total billing for this is only $2,500, which is not enough to make it worth a fraud investigation. The decision support system allows us to look into this case further very easily, we continue to look into this case.

We discover that Dr. Katz bills home visits for these patients regularly and for several other patients. On a given day, he’ll have bills for several patients who live over 100 miles from each other and from his office. This seems suspicious, so we add these home visits to our list of suspicious claims. Now Dr. Katz has over $50,000 in suspect claims.

We’re not sure that Dr. Katz saw the patients at all, but we’re pretty sure that they weren’t all home visits. If he didn’t see the patients, where did he get the information that allowed him to bill? It turns out that all Dr. Katz’s patients were also patients at the Oakwood Outpatient Rehabilitation Center. They were also all patients at Life Chiropractic, Swan Podiatry and Ollie Optometrics. We’ve uncovered a whole fraud ring, because we chased down $2,500 in suspect claims.